The Blackstone Group LP (BX - Analyst Report), which is looking forward to capitalize on the consistent growth witnessed in the Financial Advisory business since several years through the segments spin-off, may see a number of its senior managing directors exiting the firm. As reported by Reuters, several of the companys directors in the mergers and acquisitions (Mamp;A) advisory unit may either leave or retire before the spin-off materializes.

Employees of Blackstones Mamp;A Unit

Of the 17 senior managing directors working in Blackstones Mamp;A unit, around 12 executives consisting of experienced investment bankers have not yet entered into any job contract to work with the new entity. However, PJT Partners anticipates nearly nine senior directors of Blackstone to join its Mamp;A business.

Moreover, almost all of the 15 Mamp;A bankers (below the senior level) at Blackstone are anticipated to work in PJT Partners after the spin-off. On the other head, several senior leaders are expected to continue working at Blackstone.

Spin-Off Flashback

In Oct 2014, Blackstone announced a deal to spin off its Financial Advisory segment. Per the agreement, the companys financial advisory services, restructuring and reorganization advisory services as well as Park Hill Group fund placement services for alternative investment funds will merge with an independent financial advisory firm PJT Partners.

The deal, which is expected to be closed in the second half of 2015, will result in the formation of a new company. This new entity will operate as a publicly traded independent company under the supervision of PJT Partners. After the spin off, 65% stake of the new company will be held by Blackstones existing shareholders and the remaining interest will be jointly owned by the employees of Blackstones advisory segment as well as PJT Partners.

Expected Activities

Though Blackstone will hold the majority stake in the new company, the expected mass departure of senior Mamp;A executives indicates PJT Partners dominance over the administrative front. However, in the restructuring and fund advisory areas, Blackstones executives are likely to play an active role with several of the 22 Blackstone partners expected to start working in the new company.

Blackstone expects to benefit from the enhanced opportunities available in the broadening advisory area with more focus and efficiency achievable through the spin-off. However, several employees seem reluctant to join PJT Partners as the new firm expectedly will take some time to set the business. Moreover, expected closure of around 15 advisory offices by PJT Partners may have prompted some of these exits.

Nevertheless, Blackstone lengthened the vesting period for the stock granted to employees in an attempt to make it difficult for the workers to leave the firm. This will likely result in more workers joining PJT Partners after the spin-off takes place.